In a setback to Punjab National Bank, a U.S. bankruptcy court has allowed Indian jeweler Nirav Modi’s company Firestar Diamonds and other related companies to sell their assets, the Mint reported. The court has invited bids for the assets of the distressed companies till April 27, and the auction of the assets will start on May 5.

The Punjab National Bank (PNB), in a hearing on March 28, opposed the sale, saying that truncated sale will limit the recovery of creditors. The PNB spokesperson did not comment on the development, the report added.

The PNB told the court that the companies have not given any information on whether any of the assets to be sold were obtained with funds fraudulently obtained from the bank, or whether debtors were otherwise used to launder funds. The bank is facing a liability of Rs 12,636 crore in the Nirav Modi scam.

“The Court having conducted a hearing on 28 March 2018, at which time the Court considered, among other things, the bidding procedures, any objections thereto and the oral arguments of counsel; and it further appearing that the relief requested is reasonable and necessary to protect the interests of the debtors, their estates, and creditors,” the court order dated March 29 said.

As per the court, the distressed companies have demonstrated sufficient business reasons for approval of bidding and auctioning of its assets. The court will hold sale hearing on May 15.

Even though the court did not pay heed to PNB’s objections, the bank has time until May 8 to file an appeal with its objections, and the companies have time until May 11 to respond.

In February, Firestar Diamond and two affiliates (Fantasy Inc. and A. Jaffe Inc.) filed for bankruptcy protection in the southern district of New York court through a voluntary petition under Chapter 11 of bankruptcy code, citing supply chain disruption. The companies have not mentioned PNB as one of its creditors in the bankruptcy petitions.

Meanwhile, the Belgian authorities have frozen two accounts of Modi at the request of India’s Enforcement Directorate, the Hindu reported.

The ED has also sent Letters Rogatories to Hong Kong, Switzerland, the United States, the United Kingdom, Dubai, Singapore and South Africa in a bid to stop Modi from using the funds in those accounts.

“After the Punjab National Bank scam broke out and investigations were launched, all agencies were roped in to gather more and more facts. The Financial Intelligence Unit (FIU) has also been providing vital information,” the report quoted an official as saying.

The ED also arrested the vice president of a firm of Modi last week for allegedly aiding in the laundering of over Rs 5,900 crore in connection with the government owned bank fraud case, the report said.